A Consumer's Glossary of Basic Banking and Financial Terminology

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Account Balance

An amount recorded as the client's account balance at a specific moment. It may be a credit or debit balance, thus it is an amount  actually available to the client, or an amount which the client owes to the bank at a given moment.

Other terms used: Balance

Account Statement

A document confirming the movements on and the balance of the client's account. It is issued by the bank and submitted to the client (in person, by mail or in another agreed manner) at regular intervals as chosen by the client (with view to the terms and conditions stipulated by the bank itself or card companies associations).

Other terms used: Statement of Account

Accounting Entry - Active Item

The projection of a transaction executed upon the client's order (e.g. payment order, client's cash withdrawals).

Accounting Entry - Passive Item

The projection of a transaction in the client's account, which, however, was executed upon the order of a person other than the client (e.g. incoming payments credited to the client's account, effected collections debited to the client’s account).

Amortization Schedule

An overview of individual partial instalments, by which a loan or another debt are gradually repaid. It is often an overview, in which the precise amount and the due date of each instalment are specified.

Other terms used: Repayment Schedule

APRC

It represents an aggregate of all charges and other costs, which the debtor/client while duly fulfilling his or her obligations arising from a loan agreement must pay to the creditor/bank apart from the principal in connection with a granted mortgage loan throughout the existence of his or her liability and which is expressed by a percentage share from the outstanding amount for a period of one year. The indication of APRC with mortgage loans is conditioned by the Code on the Provision of Pre-Contractual Information Related to Mortgage Loans. The APRC is similar to the RPSN indicated with consumer credits – see RPSN.

Other terms used: Annual Percentage Rate of Charge

ATM

A cash dispenser, which namely serves to pay out cash in bank notes by a payment or an ATM card.

Other terms used: Automatic Teller Machine

Available Balance

Funds that are available to the client at a given moment. As a rule, it is a credit balance of the client's account, which may be increased up to the authorized debit or overdraft limit, or decreased by account blocking (e.g. due to execution).

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Bank Transfer

A means of the system of payment. Banks execute money transfers based on the client's order; whereas credit or direct debit methods are used in the domestic system of payment.

Other terms used: Credit Transfer

Bank Account

An account kept at a bank. Bank accounts are divided into individual types, e.g. current accounts, deposit accounts, credit accounts, etc.

Bank Connection

A distinct specification of the client's account. In the domestic system of payment, it consists of the client's account number and the identification code of the bank assigned by the Czech National Bank.

Bill of Exchange / Promissory Note

A security containing distinct appurtenances defined by law, namely an unconditional undertaking or order of the issuer to pay the indicated amount at a specific date and location, and which gives the right to the lawful holder to demand such performance in compliance with the bill of exchange/promissory note.

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Card Blocking

The blocking of a payment card at the client's request, e.g. in case of a lost or stolen payment card.

Other terms used: Card Stoplisting; Stoplisting

Card Companies Association

An association of the issuers of payment cards, e.g. VISA, MasterCard, American Express, Diners Club, and JCB.

Cash

Bank notes and coins.

Other terms used: Physical money

Cheque

A means of payment entitling the person indicated on the cheque to the payment of the amount specified on the cheque, namely from the account of the person who issued the cheque.

Collection

The method of payment by collection is often used for regular payments, e.g. for electricity, gas, etc., however, it has to be agreed by the payer and the recipient in advance. The client (payer) will grant his or her consent to the bank that collections may be made from his or her account (see – Direct Debit). The client, for whom such payments are designated (recipient), then instructs the bank to mediate payments from the payer’s account to recipient's account (see – Collection Order). The recipient's order not executed by the payer’s bank (due to a missing Direct Debit consent, an insufficient limit specified in the Direct Debit consent, or due to an insufficient cover in the payer's account) is denoted as rejected collection.

Collection Order

A recipient's order instructing the bank to mediate the transfer of money from the payer's account to the recipient's account. To ensure that the money is actually debited from the client's (payer's) account based on such order, it is necessary, among others, that the client (payer) explicitly authorises his or her bank to execute direct debit payments in favour of the recipient's account indicated in such authorization (the client grants his or her Direct Debit consent).

Other terms used: Collection

CR

An abbreviation indicated in account statements, designating an item, which is credited in favour of the client’s account, i.e. it increases the account balance (e.g. incoming payment).

Other terms used: Credit

Credit Balance

A positive account balance.

Credit Card

A payment card, with which the option to withdraw credit is associated.  The credit limit of a credit card is independent on the client’s current account; some banks issue credit cards, even if the client does not have an account open with them.

Creditworthiness

The client's ability to pay off the required loan, or the client's ability to pay his or her liabilities in a due and timely manner.

Other terms used: Credibility

Current Account

A bank account, where the client's deposits his or her money, which may be withdrawn or deposited at any time (with view to the terms and conditions stipulated by the bank). The client deposit funds to and withdraw funds from the current account in various ways, for example in cash or by way of non-cash transfers from or to other accounts (e.g. wage payments from the employer or payments for provided services).

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Debit Card

A payment card connected with the current account balance.  By means of the debit card, the client can make payments up to the available balance on this account.

Debit Balance

A negative balance of the client's account. The client owes the amount indicated in the account statement as the balance to the bank (whether due to a granted loan, authorized overdraft, unauthorized debit, or due to other reasons).

Deposit

Money deposited in an account, whether in cash or by way of a non-cash deposit.

Deposit Account

An account, which serves for depositing the client's money for a specific period and at an interest rate agreed in advance. Usually, it involves the deposition of a specific amount for a specific period at an agreed fixed interest rate.

Other terms used: Term Account

Depository Bill of Exchange

A security with which the right of the owner of such security to demand payment of the amount and as of the date specified thereon by the issuing bank is associated. Actually, it is a promissory note of the bank, by which the bank undertakes to pay a certain amount to the client as of a certain date.

Direct Banking

A method of remote communication with the bank. In this case, the client submits and acquires information directly by means of one of the electronic channels (e.g. by Internet, telephone, mobile phone, etc.) and not by means of a bank employee at the bank counter.

Other terms used: Electronic Banking

Direct Debit

The client's (payer's) consent, by which the client authorizes the bank to execute collections debited to the client's account as ordered by a person or entity explicitly indicated in such written consent.

DR

An abbreviation indicated in account statements, designating an item, which is debited to the client’s account, i.e. it decreases the account balance (e.g. outgoing payment).

Other terms used: Debit

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Embossed Payment Card

A payment card, which, apart from an electromagnetic strip (or a chip) serving for withdrawals from ATMs and payments at points of sale through electronic terminals, is also provided with embossing, which is a relief print facilitating payments at points of sale by means of a mechanical card reader (i.e. an imprinter). This means that the card may be used for payments at points of sale that are not equipped with electronic terminals for card payments, or in cases, when electronic communication via such a terminal fails due to other reasons.

Escrow Account

An account, from which withdrawals may be made only subject to the fulfilment of certain terms and conditions specified in an agreement.

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Fixed Period

A period, during which the used interest rate is fixed, i.e. fixed interest rate. It is often used with mortgage credits, where the rate is fixed for a specific period, whereas after the expiry of such period the interest rate usually changes.

Other terms used: Fixation

Fixed Interest Rate

An interest rate, which is fixed for the whole period of maturity of a loan or another product, or for the agreed fixed period (e.g. 12.5% p.a.).

Floating Interest Rate

An interest rate, which is not fixed for the whole period, but which changes depending on the market development.

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GSM Banking

One of the options of utilising direct electronic banking. The client uses a GSM application installed in his or her mobile phone to communicate (including the submission of orders) with the bank (e.g. SIM toolkit) - compared to common phone banking, it provides a higher level of client protection.

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Home Banking

A service enabling the client to communicate with the bank (including the submission of orders) via the Internet. A computer with an installed special application of the bank is necessary for this type of communication (this is how Home Banking differs from Internet Banking).

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IBAN

It is an account number in international format approved within the EEA (European Economic Area, i.e. for EU-25 plus Liechtenstein, Norway, and Iceland). The bank indicates the account number in this format for the client – account owner in the account statement. The account number in this format should be used for payments to accounts within the EEA.

Other terms used: International Bank Account Number

Interest Rate

The price of lent or deposited money, usually expressed in percent per annum. The concrete amount of this price (rate) is associated with the period, for which the money is lent or deposited, and often also with the amount.

Internet Banking

A service enabling the client to communicate with the bank (including the submission of orders) via the Internet – the client does not need to install any special applications, an Internet connection is sufficient.

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Maturity

A date as of which one party is obligated to pay a certain amount to the other party.

Other terms used: Due Date

Mortgage Credit

Credit secured by a lien on real estate.

Other terms used: Mortgage

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Non-Cash Transfer

A transaction performed without the use of physical money (cash) by means of bank transfers and other accounting transactions.

Other terms used: Wire Transfer/ Cashless Transfer

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Overdraft

An account, in relation to which the client has an overdraft authorized by the bank up to a specified limit, thus it is an account, from which the client may withdraw funds to a negative balance within the frame of the pre-determined overdraft limit. Such service may be sometimes provided to the client in connection with his or her current account, and at other times, in connection with an account especially reserved for such purpose.

Other terms used: Overdraft Account, Authorized Debit

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Payment Card

A card facilitating payments for goods and services at most points of sale, as well as cash withdrawals from ATMs, or the use of other services offered by ATMs (e.g. charging of mobile phone credit).

Payment Order

The client's (payer's) order instructing the bank to transfer money from the client's account to the recipient's account, i.e. to execute payment (a transfer of a specific amount).

Payment Order Due Date

The date to which the amount shall be debited from the payer’s account.

p.a.

Per annum - annually; it is used with interest rates, which are usually calculated in percent for a period of one year (e.g. 4.5 % p.a.).

Other terms used: per annum

PIN

A personal identification number used for the authorization of transactions (made e.g. by means of payment cards, the Internet).

Other terms used: Personal Identification Number

Phone Banking

A service enabling the client to communicate with the bank by means of a telephone connection. This service may be used in a standard manner or with the aid of an adequate mobile phone application (e.g. GSM network, which secures a higher level of client protection (sometimes also called GSM Banking).

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Revolving

Revolving (renewal) of a product (e.g. a loan, term deposit) under agreed terms and conditions.

RPSN

It represents an aggregate of all charges and other costs, which the debtor/client while duly fulfilling his or her obligations arising from a loan agreement must pay to the creditor/bank apart from the principal in connection with a granted loan throughout the existence of his or her liability and which is expressed by a percentage share from the outstanding amount for a period of one year. The obligation to indicate RPSN with consumer loans is stipulated by law.

Other terms used: In Czech: Roční procentní sazba nákladů (RPSN); Annual Percentage Rate of Charge

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Standing Payment Order

An order for recurring transfers or collections of money to or from the client’s account to another account.

Other terms used: Standing Order

SWIFT

A worldwide system enabling secured transmission in various product areas.

Other terms used: Society for Worldwide Interbank Financial Telecommunication

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Traveller's Cheque

A special type of a cheque, which is often issued in one of the main currencies (e.g. EUR, USD, etc.) and which may be purchased mainly in banks and at some travel agencies. It is designated for travelling abroad, as it may be sold at most foreign banks, or it may be used for payments at shops or for services (e.g. hotels). The particular institution may charge a fee for the purchase or sale of a traveller’s cheque. If the basic rules are complied with (counter-signature in the presence of a bank or shop employee and the presentation of a passport), traveller’s cheques are considered as a safer alternative for transporting foreign currency abroad (i.e. means of payment in foreign currency) than cash.

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Attention: This glossary has been taken over from the Czech Banking Association with its explicit consent and it serves solely for educational purposes.

The Czech Banking Association (CBA) and Česká spořitelna provide no guarantee whatsoever as to the correctness, up-to-datedness, or completeness in relation to the use of any information contained in the Glossary of Banking and Financial Terminology provided by CBA or by means of its website.